Understanding the Clarified Auditing Standards - 2012 Audit Risk Alert

With the release of Statement on Auditing Standards (SASs) Nos. 122-125, the Auditing Standards Board (ASB) has substantially completed its project to redraft all of the auditing sections in Codification of Statements on Auditing Standards (contained in AICPA Professional Standards). The issuance of the clarified standards reflect the ASB’s established clarity drafting conventions designed to make the standards easier to read, understand, and apply. Among other improvements, the objectives of the auditor and the requirements with which the auditor has to comply when conducting an audit in accordance with generally accepted auditing standards (GAAS) are now specified more clearly.

The AICPA has developed this Audit Risk Alert, Understanding the Clarified Auditing Standards, to build awareness and to inform auditors of the changes and effects the clarified standards will have on audit practices and methodologies, including the changes that may affect the reports of certain audited financial statements.

This alert provides an introduction to the background and implications of the clarity project and presents a schedule mapping the existing standards to the clarified standards.  Auditors will need to make some adjustments to their practices as a result of the requirements of the clarified standards, and this alert addresses how an auditor may start planning for these changes.

The alert discusses the following in just the right amount of detail:

• The issuance of the clarified standards
• How to prepare for the transition
• The summarized changes in requirements from SAS Nos. 1-121 to the clarified SASs

With a close look at the changes brought about by the new clarified standards, the auditor will be able to review the changes in a concise format and identify those areas that may affect their specific clients. This alert highlights the changes from the existing standards and has been ordered to provide the auditor with a glimpse of those requirements that may need to be addressed early.

Now is the time for all auditors to start preparing for the transition to the clarified standards that are effective for calendar-year 2012 audits. A smooth transition will require information, education, and training.  Follow the “how to” steps included in this alert to help your staff and clients with the transition.